Niev | Economics homework help

answer in 150 words and provide 1 reference

 Forecasting & Legislations

1.”Forecasting is both an art and a science.” Discuss with particular reference to Panel Consensus and Econometric Method.
      Forecasting is a planning tool utilized by management in its pursuit to grapple with the ambiguity of the future by relying on historical and present data and analysis of trends.Forecasting is utilized by management to determine events affecting a company such as but not limited to allocating budgets, plan for anticipated expenses, sales expectations and increase or decrease of the price of shares for an upcoming period of time. It is a science because of the techniques used in forecasting and it is an art because of the application of forecasting techniques.
     Econometric forecasting model is a quantitative and original approach using systems of relationships. Independent variables like inflation, exchange rates, gross national product, etcetera to analyze dependent variables mainly aggregate time series. As econometric analysis is based on economics and statistics it gives a scientific process to forecasting. It is also art because the application of different econometric analysis to forecast events affecting the firm.Panel consensus is a qualitative method that is based on intuitive or judgmental evaluation. It is used generally when data are scarce, not available, or no longer relevant. Internal members and expert’s opinions are incorporated in this method of forecasting. This is both an art and scientific process because you not only need hard data to make a logical decision that would make the firm successful but also creative thinking to use that data to predict the future.

Reference: 

n. a. (19, Jan 2011). Forecasting Methods. Retrieved from: https://scm.ncsu.edu/scm-articles/article/forecasting-methods